Investors Hold Their Nerve On Catalonia Crisis

Contributed by Sussex SEO13 November, 2017

The Catalonia crisis does not seem to be one that will end anytime soon, and investors have refused to subject themselves to the endless back and forth of the political situation. Many investors are holding their ground with the firm belief that Catalonia's efforts will fail eventually.

Hundreds of millions of euros are on the line considering that Catalonia is Spain's richest region. Yes, the potential political instability and unrest could turn out very bad for business in the area, but many investors are not planning to go anywhere anytime soon, especially those that hit record sales this year.

The day of these referendum, October 1, was an uneventful one with Catalonians carrying on to vote despite the efforts of the Spanish government to stop them from doing so. While the results showed that 90% of the votes were in favour of secession, too many people boycotted the referendum for it to be reliable. Further, on October 11, Catalonia was given 8 days to drop is independent bid.

In spite of all of this, 20% of all new company registrations in Spain where in Catalonia between January and July of 2017, a rate that is higher than any other part of Spain. In May, Nestle announced that it was embarking on a 37-million-euro project to expand its instant coffee factory in Catalonia. And Ferrari commissioned their theme park south of the Catalan capital of Barcelona - a project worth 100 million euros. These are only a few examples of the growing investments in the region, and it is easy to see why investors are adamant about keeping their businesses there.

The vibe is about the same in the Catalan property market. Property prices in Catalonia have risen by 9.2% so far in 2017. The majority of foreign investors, at least those in the top-end real estate market, are continuing with their investments. While some decided to hold back until after the vote, as it becomes clearer the Spanish government is not ready to let Catalonia go, it is likely property investors will go the way of other investors and stand their ground as they wait for the storm to pass.

Property expert, Julian Walker of Property and Spain thinks "many foreign property buyers are not fazed by what is happening in Catalonia because they really believe the Spanish government's will win in the end. Even those who were cautious at first are beginning to relax after seeing what happened to the results of the October 1 referendum. It is safe to say the property market will do just fine for now."

Investors and businesses are doing what investors and businesses do in such volatile situations by making intelligence guesses. It is true that the fall-back for investors could be devastating should Catalonia achieve its aim of secession, with as much as 80% collapse in the economy of the region. However, as events unfold, companies and investors seem to have more reason to be confident.

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